The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Stock trading or mutual funds involve several investment strategies, and it can not be exceptionally comforting for beginners. The following information shows the vital differences between mutual funds and stock trading such as tax-benefits, lock-in periods, trade fees, and monitoring, etc.
There are numerous price fluctuations of shares in the stock market, and buying/selling of these shares is known as stock trading. The shareholder solely manages everything about stocks; such as what and when to buy/sell, how long to hold, etc. It requires frequent stock monitoring and thorough market research.
However, in mutual funds, fund managers do all the required tasks on your behalf. After you invest in a mutual fund, the fund managers handle its performance monitoring, market research, and buying/selling.
The following infographic tells about a few significant differences between stock trading and mutual funds, their drawbacks & benefits, and some notable highlights of both. The worldwide sales data for open-end funds by region and the percentage of these open-end funds’ assets are also shown.
The above data shows that at the end of Q1 2020, equity funds were at forty per cent of global regulated open-end funds’ assets, whereas 23 and 12 per cent were held by the bond funds and the balanced funds, respectively. The money market funds were at 16 per cent of the worldwide total. Moreover, in the Q1 2020, US was at 52 per cent of global assets while Europe and the Asia-Pacific regions & Africa were at 34 per cent and 14 per cent, respectively.
Infographic by Discount broker in India